Complete Home & Office Legal Guide/Complete Home and Office Legal Guide (Chestnut) (1993).ISO/stat/ucc/ucc4a_1.ws

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     (b) This subsection applies if a receiving bank other than
the beneficiary's bank fails to execute a payment order despite
the existence on the execution date of a withdrawable credit
balance in an authorized account of the sender sufficient to
cover the order. If the sender does not receive notice of
rejection of the order on the execution date and the authorized
account of the sender does not bear interest, the bank is obliged
to pay interest to the sender on the amount of the order for the
number of days elapsing after the execution date to the earlier
of the day the order is canceled pursuant to Section 4A-211(d) or
the day the sender receives notice or learns that the order was
not executed, counting the final day of the period as an elapsed
day. If the withdrawable credit balance during that period falls
below the amount of the order, the amount of interest is reduced
accordingly.

     (c) If a receiving bank suspends payments, all unaccepted
payment orders issued to it are deemed rejected at the time the
bank suspends payments.

     (d) Acceptance of a payment order precludes a later
rejection of the order. Rejection of a payment order precludes
a later acceptance of the order.

 4A-211. Cancellation and Amendment of Payment Order.

     (a) A communication of the sender of a payment order
cancelling or amending the order may be transmitted to the
receiving bank orally, electronically, or in writing. If a
security procedure is in effect between the sender and the
receiving bank, the communication is not effective to cancel or
amend the order unless the communication is verified pursuant to
the security procedure or the bank agrees to the cancellation or
amendment.

     (b) Subject to subsection (a), a communication by the
sender cancelling or amending a payment order is effective to
cancel or amend the order if notice of the communication is
received at a time and in a manner affording the receiving bank a
reasonable opportunity to act on the communication before the
bank accepts the payment order.

     (c) After a payment order has been accepted, cancellation
or amendment of the order is not effective unless the receiving
bank agrees or a funds-transfer system rule allows cancellation
or amendment without agreement of the bank.

     (1) With respect to a payment order accepted by a
receiving bank other than the beneficiary's bank, cancellation or
amendment is not effective unless a conforming cancellation or  ≡7É3
 èamendment of the payment order issued by the receiving bank is
also made.

     (2) With respect to a payment order accepted by the
beneficiary's bank, cancellation or amendment is not effective
unless the order was issued in execution of an unauthorized
payment order, or because of a mistake by a sender in the funds
transfer which resulted in the issuance of a payment order (i)
that is a duplicate of a payment order previously issued by the
sender, (ii) that orders payment to a beneficiary not entitled to
receive payment from the originator, or (iii) that orders payment
in an amount greater than the amount the beneficiary was entitled
to receive from the originator. If the payment order is canceled
or amended, the beneficiary's bank is entitled to recover from
the beneficiary any amount paid to the beneficiary to the extent
allowed by the law governing mistake and restitution.
 An unaccepted payment order is canceled by operation of
law at the close of the fifth funds-transfer business day of the
receiving bank after the execution date or payment date of the
order.

     (e) A canceled payment order cannot be accepted. If an
accepted payment order is canceled, the acceptance is nullified
and no person has any right or obligation based on the
acceptance. Amendment of a payment order is deemed to be
cancellation of the original order at the time of amendment and
issue of a new payment order in the amended form at the same
time.

     (f) Unless otherwise provided in an agreement of the
parties or in a funds-transfer system rule, if the receiving
bank, after accepting a payment order, agrees to cancellation
or amendment of the order by the sender or is bound by a
funds-transfer system rule allowing cancellation or amendment
without the bank's agreement, the sender, whether or not
cancellation or amendment is effective, is liable to the bank for
any loss and expenses, including reasonable attorney's fees,
incurred by the bank as a result of the cancellation or amendment
or attempted cancellation or amendment.

     (g) A payment order is not revoked by the death or legal
incapacity of the sender unless the receiving bank knows of the
death or of an adjudication of incapacity by a court of competent
jurisdiction and has reasonable opportunity to act before
acceptance of the order.

     (h) A funds-transfer system rule is not effective to the
extent it conflicts with subsection (c)(2).

 4A-212. Liability and Duty of Receiving Bank Regarding
Unaccepted Payment Order.

 If a receiving hank fails to accept a payment order that
it is obliged by express agreement to accept, the bank is liable
for breach of the agreement to the extent provided in the  ≡7É3
 èagreement or in this Article, but does not otherwise have any
duty to accept a payment order or, before acceptance, to take any
action, or refrain from taking action, with respect to the order
except as provided in this Article or by express agreement
Liability based on acceptance arises only when acceptance occurs
as stated in Section 4A-209, and liability is limited to that
provided in this Article. A receiving bank is not the agent of
the sender or beneficiary of the payment order it accepts, or of
any other party to the funds transfer, and the bank owes no duty
to any party to the funds transfer except as provided in this
Article or by express agreement.


PART 3
 EXECUTION OF SENDER'S PAYMENT ORDER BY RECEIVING BANK
 4A-301. Execution and Execution Date.

     (a) A payment order is "executed" by the receiving bank
when it issues a payment order intended to carry out the payment
order received by the bank. A payment order received by the
beneficiary's bank can be accepted but cannot be executed.

     (b) "Execution date" of a payment order means the day on
which the receiving bank may properly Issue a payment order in
execution of the sender's order. The execution date may be
determined by instruction of the sender but cannot be earlier
than the day the order is received and, unless otherwise
determined, is the day the order is received. if the sender's
instruction states a payment date, the execution date is the
payment date or an earlier date on which execution is reasonably
necessary to allow payment to the beneficiary on the payment
date.

 4A-302. Obligations of Receiving Bank in Execution of
Payment Order.

     (a) Except as provided in subsections (b) through (d), if
the receiving bank accepts a payment order pursuant to Section
4A-209(a), the bank has the following obligations in executing
the order:

     (1) The receiving bank is obliged to issue, on the
execution date, a payment order complying with the sender's order
and to follow the sender's instructions concerning (i) any
intermediary bank or funds-transfer system to be used in carrying
out the funds transfer, or (ii) the means by which payment orders
are to be transmitted in the funds transfer. If the originator's
bank issues a payment order to an intermediary bank, the
originator's bank is obliged to instruct the intermediary bank
according to the instruction of the originator. An intermediary
bank in the funds transfer is similarly bound by an instruction
given to it by the sender of the payment order it accepts.

     (2) If the sender's instruction states that the funds
transfer is to be carried out telephonically or by wire transfer  ≡7É3
 èor otherwise indicates that the funds transfer is to be carried
out by the most expeditious means, the receiving bank is obliged
to transmit its payment order by the most expeditious available
means, and to instruct any intermediary bank accordingly. If a
sender's instruction states a payment date, the receiving bank is
obliged to transmit its payment order at a time and by means
reasonably necessary to allow payment to the beneficiary on the
payment date or as soon thereafter as is feasible.

    (b) Unless otherwise instructed, a receiving bank ì
executing a payment order may use any funds-transfer system if ì
use of that system is reasonable in the circumstances, and (ii) ì
issue a payment order to the beneficiary's bank or to an ì
intermediary bank through which a payment order conforming to the ì
sender's order can expeditiously be issued to the beneficiary's ì
bank if the receiving bank exercises ordinary care in the ì
selection of the intermediary bank. A receiving bank is not ì
required to follow an instruction of the sender designating a ì
funds-transfer system to be used in carrying out the funds ì
transfer if the receiving bank, in good faith, determines that it ì
is not feasible to follow the instruction or that following the ì
instruction would unduly delay completion of the funds transfer.

     (c) Unless subsection (a)(2) applies or the receiving bank
is otherwise instructed, the bank may execute a payment order by
transmitting its payment order by first class mail or by any
means reasonable in the circumstances. If the receiving bank is
instructed to execute the sender's order by transmitting its
payment order by a particular means, the receiving bank may issue
its payment order by the means stated or by any means as
expeditious as the means stated.

     (d) Unless instructed by the sender, (i) the receiving
bank may not obtain payment of its charges for services and
expenses in connection with the execution of the sender's order
by issuing a payment order in an amount equal to the amount of
the sender's order less the amount of the charges, and (ii) may
not instruct a subsequent receiving bank to obtain payment of its
charges in the same manner.

 4A-303. Erroneous Execution of Payment Order.

     (a) A receiving bank that (i) executes the payment order
of the sender by issuing a payment order in an amount greater
than the amount of the sender's order, or (ii) issues a payment
order in execution of the sender's order and then issues a
duplicate order, is entitled to payment of the amount of the
sender's order under Section 4A-402(c) if that subsection is
otherwise satisfied. The bank is entitled to recover from the
beneficiary of the erroneous order the excess payment received to
the extent allowed by the law governing mistake and restitution.

     (b) A receiving bank that executes the payment order of
the sender by issuing a payment order in an amount less than the
amount of the sender's order is entitled to payment of the amount  ≡7É3
 èof the sender's order under Section 4A-402(c) if (i) that
subsection is otherwise satisfied and (ii) the bank corrects its
mistake by issuing an additional payment order for the benefit of
the beneficiary of the sender's order. If the error is not
corrected, the issuer of the erroneous order is entitled to
receive or retain payment from the sender of the order it
accepted only to the extent of the amount of the erroneous order.
This subsection does not apply if the receiving bank executes the
sender's payment order by issuing a payment order in an amount
less than the amount of the sender's order for the purpose of
obtaining payment of its charges for services and expenses
pursuant to instruction of the sender.

     (c) If a receiving bank executes the payment order of the
sender by issuing a payment order to a beneficiary different
from the beneficiary of the sender's order and the funds transfer
is completed on the basis of that error, the sender of the
payment order that was erroneously executed and all previous
senders in the funds transfer are not obliged to pay the payment
orders they issued. The issuer of the erroneous order is entitled
to recover from the beneficiary of the order the payment received
to the extent allowed by the law governing mistake and
restitution.

 4A-304. Duty of Sender to Report Erroneously Executed Payment
Order.

    If the sender of a payment order that is erroneously
executed as stated in Section 4A-303 receives notification from
the receiving bank that the order was executed or that the
sender's account was debited with respect to the order, the
sender has a duty to exercise ordinary care to determine, on the
basis of information available to the sender, that the order was
erroneously executed and to notify the bank of the relevant facts
within a reasonable time not exceeding 90 days after the
notification from the bank was received by the sender. If the
sender fails to perform that duty, the bank is not obliged to pay
interest on any amount refundable to the sender under Section
4A-402(d) for the period before the bank learns of the execution
error. The bank is not entitled to any recovery from the sender
on account of a failure by the sender to perform the duty stated
in this section.

 4A-305. Liability for Late or Improper Execution or Failure to
Execute Payment Order.

     (a) If a funds transfer is completed but execution of a
payment order by the receiving bank in breach of Section 4A-302
results in delay in payment to the beneficiary, the bank is
obliged to pay interest to either the originator or the
beneficiary of the funds transfer for the period of delay caused
by the improper execution. Except as provided in subsection (c),
additional damages are not recoverable.

     (b) If execution of a payment order by a receiving bank in  ≡7É3
 èbreach of Section 4A-302 results in (i) noncompletion of the
funds transfer, (ii) failure to use an intermediary bank
designated by the originator, or (iii) issuance of a payment
order that does not comply with the terms of the payment order of
the originator, the bank is liable to the originator for its
expenses in the funds transfer and for incidental expenses and
interest losses, to the extent not covered by subsection (a),
resulting from the improper execution. Except as provided in
subsection (c), additional damages are not recoverable.

     (c) In addition to the amounts payable under subsections
(a) and (b), damages, including consequential damages, are
recoverable to the extent provided in an express written
agreement of the receiving bank.

     (d) If a receiving bank fails to execute a payment order
it was obliged by express agreement to execute, the receiving
bank is liable to the sender for its expenses in the transaction
and for incidental expenses and interest losses resulting from
the failure to execute. Additional damages, including
consequential damages, are recoverable to the extent provided in
an express written agreement of the receiving bank, but are not
otherwise recoverable.

     (e) Reasonable attorney's fees are recoverable if demand
for compensation under subsection (a) or (b) is made and refused
before an action is brought on the claim. If a claim is made for
breach of an agreement under subsection (d) and the agreement
does not provide for damages, reasonable attorney's fees are
recoverable if demand for compensation under subsection (d) is
made and refused before an action is brought on the claim.

     (f) Except as stated in this section, the liability of a
receiving bank under subsections (a) and (b) may not be varied
by agreement.

PART 4
PAYMENT

 4A-401. Payment Date.

 "Payment date" of a payment order means the day on which
the amount of the order is payable to the beneficiary by the
beneficiary's bank. The payment date may be determined by
instruction of the sender but cannot be earlier than the day the
order is received by the beneficiary's bank and, unless otherwise
determined, is the day the order is received by the beneficiary's
bank.

 4A-402. Obligation of Sender to Pay Receiving Bank.

     (a) This section is subject to Sections 4A-205 and 4A-207.

     (b) With respect to a payment order issued to the
beneficiary's bank, acceptance of the order by the bank obliges  ≡7É3
 èthe sender to pay the bank the amount of the order, but payment
is not due until the payment date of the order.

     (c) This subsection is subject to subsection (e) and to
Section 4A-303. With respect to a payment order issued to a
receiving bank other than the beneficiary's bank, acceptance of
the order by the receiving bank obliges the sender to pay the
bank the amount of the sender's order. Payment by the sender is
not due until the execution date of the sender's order. The
obligation of that sender to pay its payment order is excused if
the funds transfer is not completed by acceptance by the
beneficiary 5 bank of a payment order instructing payment to
the beneficiary of that sender's payment order.

     (d) If the sender of a payment order pays the order and
was not obliged to pay all or part of the amount paid, the bank
receiving payment is obliged to refund payment to the extent the
sender was not obliged to pay. Except as provided in Sections
4A-204 and 4A-304, interest is payable on the refundable amount
from the date of payment.

     (e) If a funds transfer is not completed as stated in
subsection (c) and an intermediary bank is obliged to refund
payment as stated in subsection (d) but is unable to do so
because not permitted by applicable law or because the bank
suspends payments, a sender in the funds transfer that executed
a payment order in compliance with an instruction, as stated in
Section 4A-302(a)(1), to route the funds transfer through that
intermediary bank is entitled to receive or retain payment from
the sender of the payment order that it accepted. The first
sender in the funds transfer that issued an instruction requiring
routing through that intermediary bank is subrogated to the
right of the bank that paid the intermediary bank to refund as
stated in subsection (d).

     (f) The right of the sender of a payment order to be
excused from the obligation to pay the order as stated in
subsection (c) or to receive refund under subsection (d) may not
be varied by agreement.

 4A-403. Payment by Sender to Receiving Bank.

     (a) Payment of the sender's obligation under Section
4A-402 to pay the receiving bank occurs as follows:

     (1) If the sender is a bank, payment occurs when the
receiving bank receives final settlement of the obligation
through a Federal Reserve Bank or through a funds-transfer
system.

     (2) If the sender is a bank and the sender (i) credited an
account of the receiving bank with the sender, or (ii) caused
an account of the receiving bank in another bank to be
credited, payment occurs when the credit is withdrawn or, if not
withdrawn, at midnight of the day on which the credit is  ≡7É3
 èwithdrawable and the receiving bank learns of that fact.

     (3) If the receiving bank debits an account of the sender
with the receiving bank, payment occurs when the debit is made to
the extent the debit is covered by a withdrawable credit balance
in the account.

     (b) If the sender and receiving bank are members of a
funds-transfer system that nets obligations multilaterally among
participants, the receiving bank receives final settlement when
settlement is complete in accordance with the rules of the
system.  The obligation of the sender to pay the amount of a
payment order transmitted through the funds-transfer system may
be satisfied, to the extent permitted by the rules of the system,
by setting off and applying against the sender's obligation the
right of the sender to receive payment from the receiving bank of
the amount of any other payment order transmitted to the sender
by the receiving bank through the funds-transfer system. The
aggregate balance of obligations owed by each sender to each
receiving bank in the funds-transfer system may be satisfied, to
the extent permitted by the rules of the system, by setting off
and applying against that balance the aggregate balance of
obligations owed to the sender by other members of the system.
The aggregate balance is determined after the right of setoff
stated in the second sentence of this subsection has been
exercised.

     (c) If two banks transmit payment orders to each other
under an agreement that settlement of the obligations of each
bank to the other under Section 4A-402 will be made at the end of
the day or other period, the total amount owed with respect to
all orders transmitted by one bank shall be set off against the
total amount owed with respect to all orders transmitted by the
other bank. To the extent of the setoff, each bank has made
payment to the other.

     (d) In a case not covered by subsection (a), the time when
payment of the sender's obligation under Section 4A-402(b) or
4A-402(c) occurs is governed by applicable principles of law that
determine when an obligation is satisfied.

4A-404 Obligation of Beneficiary's Bank to Pay and Give Notice to
Beneficiary.

     (a) Subject to Sections 4A-211(e), 4A-405(d), and
4A-405(e), if a beneficiary's bank accepts a payment order, the
bank is obliged to pay the amount of the order to the beneficiary
of the order. Payment is due on the payment date of the order,
but if acceptance occurs on the payment date after the close of
the funds-transfer business day of the bank, payment is due on
the next funds-transfer business day. If the bank refuses to pay
after demand by the beneficiary and receipt of notice of
particular circumstances that will give rise to consequential
damages as a result of nonpayment, the beneficiary may recover
damages resulting from the refusal to pay to the extent the bank  ≡7É3
 èhad notice of the damages, unless the bank proves that it did not
pay because of a reasonable doubt concerning the right of the
beneficiary to payment.

     (b) If a payment order accepted by the beneficiary's bank
instructs payment to an account of the beneficiary, the bank is
obliged to notify the beneficiary of receipt of the order before
midnight of the next funds-transfer business day following the
payment date.  If the payment order does not instruct payment to
an account of the beneficiary, the bank is required to notify the
beneficiary only if notice is required by the order. Notice may
be given by first class mail or any other means reasonable in the
circumstances. If the bank fails to give the required notice, the
bank is obliged to pay interest to the beneficiary on the amount
of the payment order from the day notice should have been given
until the day the beneficiary learned of receipt of the payment
order by the bank. No other damages are recoverable. Reasonable
attorney's fees are also recoverable if demand for interest is
made and refused before an action is brought on the claim.

     (c) The right of a beneficiary to receive payment and
damages as stated in subsection (a) may not be varied by
agreement or a funds-transfer system rule. The right of a
beneficiary to be notified as stated in subsection (b) may be
varied by agreement of the beneficiary or by a funds-transfer
system rule if the beneficiary is notified of the rule before
initiation of the funds transfer.

 4A-405. Payment by Beneficiary's Bank to Beneficiary.

     (a) If the beneficiary's bank credits an account of the
beneficiary of a payment order, payment of the bank's obligation
under Section 4A-404(a) occurs when and to the extent (i) the
beneficiary is notified of the right to withdraw the credit, (ii)
the bank lawfully applies the credit to a debt of the
beneficiary, or (iii) funds with respect to the order are
otherwise made available to the beneficiary by the bank.

     (b) If the beneficiary's bank does not credit an account
of the beneficiary of a payment order, the time when payment of
the bank's obligation under Section 4A404(a) occurs is governed
by principles of law that determine when an obligation is
satisfied.

     (c) Except as stated in subsections (d) and (e), if the
beneficiary's bank pays the beneficiary of a payment order under
a condition to payment or agreement of the beneficiary giving the
bank the right to recover payment from the beneficiary if the
bank does not receive payment of the order, the condition to
payment or agreement is not enforceable.

     (d) A funds-transfer system rule may provide that payments
made to beneficiaries of funds transfers made through the system
are provisional until receipt of payment by the beneficiary's
bank of the payment order it accepted. A beneficiary's bank that  ≡7É3
 èmakes a payment that is provisional under the rule is entitled to
refund from the beneficiary if (i) the rule requires that both
the beneficiary and the originator be given notice of the
provisional nature of the payment before the funds transfer is
initiated, (ii) the beneficiary, the beneficiary's bank and the
originator's bank agreed to be bound by the rule, and (iii) the
beneficiary's bank did not receive payment of the payment order
that it accepted. If the beneficiary is obliged to refund payment
to the beneficiary's bank, acceptance of the payment order by the
beneficiary's bank is nullified and no payment by the originator
of the funds transfer to the beneficiary occurs under Section
4A-406.

     (e) This subsection applies to a funds transfer that
includes a payment order transmitted over a funds-transfer system
that (i) nets obligations multilaterally among participants, and
(ii) has in effect a loss-sharing agreement among participants
for the purpose of providing funds necessary to complete
settlement of the obligations of one or more participants that do
not meet their settlement obligations.  If the beneficiary's bank
in the funds transfer accepts a payment order and the system
fails to complete settlement pursuant to its rules with respect
to any payment order in the funds transfer, (i) the acceptance by
the beneficiary's bank is nullified and no person has any right
or obligation based on the acceptance, (ii) the beneficiary's
bank is entitled to recover payment from the beneficiary, (iii)
no payment by the originator to the beneficiary occurs under
Section 4A-406, and (iv) subject to Section 4A-402(e), each
sender in the funds transfer is excused from its obligation to
pay its payment order under Section 4A-402(c) because the funds
transfer has not been completed.

 4A-406. Payment by Originator to Beneficiary; Discharge
of Underlying Obligation.

     (a) Subject to Sections 4A-211(e), 4A-405(d), and
4A-405(e), the originator of a funds transfer pays the
beneficiary of the originator's payment order (i) at the time a
payment order for the benefit of the beneficiary is accepted by
the beneficiary's bank in the funds transfer and (ii) in an
amount equal to the amount of the order accepted by the
beneficiary's bank, but not more than the amount of the
originator's order.

     (b) If payment under subsection (a) is made to satisfy an
obligation, the obligation is discharged to the same extent
discharge would result from payment to the beneficiary of the
same amount in money, unless (i) the payment under subsection (a)
was made by a means prohibited by the contract of the beneficiary
with respect to the obligation, (ii) the beneficiary, within a
reasonable time after receiving notice of receipt of the order by
the beneficiary's bank, notified the originator of the
beneficiary's refusal of the payment, (iii) funds with respect to
the order were not withdrawn by the beneficiary or applied to a
debt of the beneficiary, and (iv) the beneficiary would suffer a  ≡7É3
 èloss that could reasonably have been avoided if payment had been
made by a means complying with the contract. If payment by the
originator does not result in discharge under this section, the
originator is subrogated to the rights of the beneficiary to
receive payment from the beneficiary's bank under Section
4A-404(a).

     (c) For the purpose of determining whether discharge of an
obligation occurs under subsection (b), if the beneficiary's bank
accepts a payment order in an amount equal to the amount of the
originator's payment order less charges of one or more receiving
banks in the funds transfer, payment to the beneficiary is deemed
to be in the amount of the originator's order unless upon demand
by the beneficiary the originator does not pay the beneficiary
the amount of the deducted charges.

     (d) Rights of the originator or of the beneficiary of a
funds transfer under this section may be varied only by
agreement of the originator and the beneficiary.


PART 5
MISCELLANEOUS PROVISIONS
 4A-501. Variation by Agreement and Effect of
Funds-Transfer System Rule.

     (a) Except as otherwise provided in this Article, the
rights and obligations of a party to a funds transfer may be
varied by agreement of the affected party.

     (b) "Funds-transfer system rule" means a rule of an
association of banks (i) governing transmission of payment orders
by means of a funds-transfer system of the association or rights
and obligations with respect to those orders, or (ii) to the
extent the rule governs rights and obligations between banks that
are parties to a funds transfer in which a Federal Reserve Bank,
acting as an intermediary bank, sends a payment order to the
beneficiary's bank. Except as otherwise provided in this Article,
a funds-transfer system rule governing rights and obligations
between participating banks using the system may be effective
even if the rule conflicts with this Article and indirectly
affects another party to the funds transfer who does not consent
to the rule. A funds-transfer system rule may also govern rights
and obligations of parties other than participating banks using
the system to the extent stated in Sections 4A404(c), 4A-405(d),
and 4A-507(c).

 4A-502. Creditor Process Served on Receiving Bank; Setoff
by Beneficiary's Bank.

     (a) As used in this section, "creditor process" means
levy, attachment, garnishment, notice of lien, sequestration, or
similar process issued by or on behalf of a creditor or other
claimant with respect to an account.
 ≡7É3
 è     (b) This subsection applies to creditor process with
respect to an authorized account of the sender of a payment order
if the creditor process is served on the receiving bank. For the
purpose of determining rights with respect to the creditor
process, if the receiving bank accepts the payment order the
balance in the authorized account is deemed to be reduced by
the amount of the payment order to the extent the bank did not
otherwise receive payment of the order, unless the creditor
process is served at a time and in a manner affording the bank a
reasonable opportunity to act on it before the bank accepts the
payment order.

     (c) If a beneficiary's bank has received a payment order
for payment to the beneficiary's account in the bank, the
following rules apply:

     (1) The bank may credit the beneficiary's account. The
amount credited may be set off against an obligation owed by the
beneficiary to the bank or may be applied to satisfy creditor
process served on the bank with respect to the account.

     (2) The bank may credit the beneficiary's account and
allow withdrawal of the amount credited unless creditor process
with respect to the account is served at a time and in a manner
affording the bank a reasonable opportunity to act to prevent
withdrawal.

     (3) If creditor process with respect to the beneficiary's
account has been served and the bank has had a reasonable
opportunity to act on it, the bank may not reject the payment
order except for a reason unrelated to the service of process.

     (d) Creditor process with respect to a payment by the
originator to the beneficiary pursuant to a funds transfer may be
served only on the beneficiary's bank with respect to the debt
owed by that bank to the beneficiary. Any other bank served with
the creditor process is not obliged to act with respect to the
process.

4A-503. Injunction or Restraining Order With Respect to Funds
Transfer.  For proper cause and in compliance with applicable
law, a court may restrain (i) a person from issuing a payment
order to initiate a funds transfer, (ii) an originator's bank
from honoring the payment order of the originator, or (iii)
the beneficiary's bank releasing to the beneficiary or the
beneficiary from withdrawing the funds. A court may not otherwise
restrain a person from issuing a payment order, paying or
receiving payment of a payment order, or otherwise acting with
respect to a funds transfer.

 4A-504. Order in Which items and Payment Orders May Be
Charged to Account; Order of Withdrawals From Account.

     (a) If a receiving bank has received more than one payment
order of the sender or one or more payment orders and other items  ≡7É3
 èthat are payable from the sender's account, the bank may charge
the sender's account with respect to the various orders and items
in any sequence.

     (b) In determining whether a credit to an account has been
withdrawn by the holder of the account or applied to a debt of
the holder of the account, credits first made to the account are
first withdrawn or applied.

 4A-505. Preclusion of Objection to Debit of Customer's
Account.

 If a receiving bank has received payment from its
customer with respect to a payment order issued in the name of
the customer as sender and accepted by the bank, and the customer
received notification reasonably identifying the order, the
customer is precluded from asserting that the bank is not
entitled to retain the payment unless the customer notifies the
bank of the customer's objection to the payment within one year
after the notification was received by the customer.

 4A-506. Rate of Interest.

     (a) If, under this Article, a receiving bank is obliged to
pay interest with respect to a payment order issued to the bank,
the amount payable may be determined (i) by agreement of the
sender and receiving bank, or (ii) by a funds-transfer system
rule if the payment order is transmitted through a funds-transfer
system.

     (b) If the amount of interest is not determined by an
agreement or rule as stated in subsection (a), the amount is
calculated by multiplying the applicable Federal Funds rate by
the amount on which interest is payable, and then multiplying the
product by the number of days for which interest is payable. The
applicable Federal Funds rate is the average of the Federal Funds
rates published by the Federal Reserve Bank of New York for each
of the days for which interest is payable divided by 360. The
Federal Funds rate for any day on which a published rate is not
available is the same as the published rate for the next
preceding day for which there is a published rate. If a receiving
bank that accepted a payment order is required to refund payment
to the sender of the order because the funds transfer was not
completed, but the failure to complete as not due to any fault
by the bank, the interest payable is reduced by a percentage
equal to the reserve requirement on deposits of the receiving
bank.

 4A-507. Choice of Law.

     (a) The following rules apply unless the affected parties
otherwise agree or subsection (c) applies:

     (1) The rights and obligations between the sender of a
payment order and the receiving bank are governed by the law of  ≡7É3
 èthe jurisdiction in which the receiving bank is located.

     (2) The rights and obligations between the beneficiary's
bank and the beneficiary are governed by the law of the
jurisdiction in which the beneficiary's bank is located.

     (3) The issue of when payment is made pursuant to a funds
transfer by the originator to the beneficiary is governed by the
law of the jurisdiction in which the beneficiary's bank is
located.

     (b) If the parties described in each paragraph of
subsection (a) have made an agreement selecting the law of a
particular jurisdiction to govern rights and obligations
between each other, the law of that jurisdiction governs those
rights and obligations, whether or not the payment order or the
funds transfer bears a reasonable relation to that jurisdiction.

     (c) A funds-transfer system rule may select the law of a
particular jurisdiction to govern (i) rights and obligations
between participating banks with respect to payment orders
transmitted or processed through the system, or (ii) the rights
and obligations of some or all parties to a funds transfer any
part of which is carried out by means of the system. A choice of
law made pursuant to clause (i) is binding on participating
banks. A choice of law made pursuant to clause (ii) is binding on
the originator, other sender, or a receiving bank having notice
that the funds-transfer system might be used in the funds
transfer and of the choice of law by the system when the
originator, other sender, or receiving bank issued or accepted a
payment order. The beneficiary of a funds transfer is bound by
the choice of law if, when the funds transfer is initiated, the
beneficiary has notice that the funds-transfer system might be
used in the funds transfer and of the choice of law by the
system. The law of a jurisdiction selected pursuant to this
subsection may govern, whether or not that law bears a reasonable
relation to the matter in issue.

     (d) In the event of inconsistency between an agreement
under subsection (b) and a choice-of-law rule under subsection
(c), the agreement under subsection (b) prevails.

     (e) If a funds transfer is made by use of more than one
funds-transfer system and there is inconsistency between
choice-of-law rules of the systems, the matter in issue is
governed by the law of the selected jurisdiction that has the
most significant relationship to the matter in issue.